Tuesday, September 03, 2013

Another funny thing about sunk costs

But here is another oddity on the topic: Have you noticed that, while sometimes people justify sticking with something because of sunk costs ("I've already spent money for the dress, so now I have to go to the wedding, even though I just fought with the bride and we are no longer friends") but at other times they use a high level of sunk costs to justify dropping an activity? An example of the latter occurs when waiting for, say, the subway: "We've been here 25 minutes: I'm not waiting any longer!" Surely in making that decision, how long we have waited ought to be ignored, and we should just think about how much longer we are likely to wait.